Deloitte & Touche, S.A. Barrio Dent, San Pedro 3667-1000 San José Costa Rica Tel: (506) 2246 5000 Fax: (506) 2246 5100 www.deloitte.com
INDEPENDENT AUDITORS’ REPORT
To the Inter-American Board of Agriculture
of the Inter-American Institute for Cooperation on Agriculture (IICA):
Report on the financial statements
We have audited the accompanying financial statements of the Inter-American Institute for Cooperation on Agriculture (IICA), which comprise the statements of financial position as at December 31, 2009 and 2008 and the statements of activities of unrestricted net assets, changes in net assets, and of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory notes.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with generally accepted accounting principles for non-profit organizations described in Note 1b. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of IICA as of December 31, 2009 and 2008, and the changes in its net assets and its cash flows for the years then ended in accordance with the generally accepted accounting principles for non-profit organizations described in Note 1b.
Report on supplementary information
Our audits were conducted for the purpose of forming an opinion on the basic financial statements of IICA as of December 31, 2009 and 2008. The supplementary financial information shown in Exhibits 1, 2 and 3 is presented for purposes of additional analysis and is not a required part of the basic financial statements. This supplementary financial information is the responsibility of the management of IICA. Such information has been subjected to the auditing procedures applied in the audit of the 2008 basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the 2009 basic financial statements, taken as a whole.
INTER-AMERICAN INSTITUTE FOR COOPERATION ON AGRICULTURE (IICA) STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2009 AND 2008
(Stated in United States Dollars)
Notes December 31, 2009 December 31, 2008 Unrestricted Temporarily Restricted Permanently Restricted Total ASSETS CURRENT ASSETS:
Cash 1e, 2 US$ 38,379,934 US$ 38,379,934 US$ 41,413,099 Cash equivalents 1e, 3 77,078,874 ____________ ___________ 77,078,874 63,120,361 Sub-total 115,458,808 ____________ ___________ 115,458,808 104,533,460 RECEIVABLES:
Quotas from Member States 2,326,317 2,326,317 2,276,524 Payments made on behalf of contracts, agreements and grants 1,730,374 1,730,374 743,099 Due from Regular Fund to Trust Fund 1f (80,557,713) US$80,557,713
Other 139,888 ____________ ___________ 139,888 239,877 Sub-total (76,361,134) 80,557,713 4,196,579 3,259,500 LESS: Allowance for doubtful accounts 1h (260,948) ____________ ___________ (260,948) (279,181) Receivables - net (76,622,082) 80,557,713 ___________ 3,935,631 2,980,319 INVENTORIES 1g 90,126 90,126 75,663 PREPAID EXPENSES 549,882 549,882 964,728 OTHER ASSETS 146,231 ____________ ___________ 146,231 145,928 Total current assets 39,622,965 80,557,713 120,180,678 108,700,098 PROPERTY, FURNITURE AND EQUIPMENT - Net 1i, 1j, 4 2,680,900 ____________ US$8,713,171 11,394,071 11,856,669 TOTAL ASSETS US$ 42,303,865 US$80,557,713 US$8,713,171 US$131,574,749 US$120,556,767
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES:
Accounts payable and accrued expenses US$ 2,991,242 US$ 2,991,242 US$ 5,024,242 Purchase commitments 1l 124,343 124,343 397,455 Other accruals 389,733 ____________ ___________ 389,733 401,832 Total current liabilities 3,505,318 ____________ ___________ 3,505,318 5,823,529 PROVISIONS FOR:
Repatriation and transfer of international professional
personnel 1k 1,633,380 1,633,380 1,632,497 Recognition of years of service for international
professional personnel 1k 1,544,680 1,544,680 1,653,395 Recognition of years of service for local personnel 1k 1,973,195 1,973,195 1,873,359 Other termination benefits 1k 9,472,688 ____________ ___________ 9,472,688 7,786,608 Total provisions 14,623,943 ____________ ___________ 14,623,943 12,945,859 Total liabilities 18,129,261 ____________ ___________ 18,129,261 18,769,388 NET ASSETS: Unrestricted funds: Regular fund: General subfund 1b 4,258,001 4,258,001 4,979,608 Working subfund 1b 4,084,172 4,084,172 4,084,172 Miscellaneous income fund 1b 10,948,150 10,948,150 10,773,080 Institutional net rate fund 1b 2,203,381 2,203,381 3,367,532 Fixed assets fund 1b 2,680,900 2,680,900 3,143,498 Temporarily restricted funds:
Trust funds 1b US$80,557,713 80,557,713 66,726,318 Permanently restricted fund - Land 1b _____________ ____________ US$8,713,171 8,713,171 8,713,171 Total net assets 24,174,604 80,557,713 8,713,171 113,445,488 101,787,379 TOTAL LIABILITIES AND NET ASSETS US$ 42,303,865 US$80,557,713 US$8,713,171 US$131,574,749 US$120,556,767 CONTINGENCIES 11 US$ 1 US$ 1 US$ 1 US$ 1 US$ .
INTER-AMERICAN INSTITUTE FOR COOPERATION ON AGRICULTURE (IICA) STATEMENTS OF ACTIVITIES OF UNRESTRICTED NET ASSETS
YEARS ENDED DECEMBER 31, 2009 AND 2008
(Stated in United States Dollars)
Notes 2009 2008 Regular Fund Quotas Miscellaneous Income Fund Institutional Net Rate
Fund Trust Funds Total
Regular Fund Quotas Miscellaneous Income Fund Institutional Net Rate
Fund Trust Funds Total
REVENUES:
Quotas from Member States 1c US$ 27,227,816 US$ 27,227,816 US$27,227,816 US$ 27,227,816 Recovery of Institutional Net Rate (INR) 5 US$ 8,695,542 8,695,542 US$10,388,743 10,388,743 Temporarily restricted funds assets released
from restrictions 1f US$154,379,675 154,379,675 US$206,313,881 206,313,881 Commercial and miscellaneous operations - Net 6 _____________ US$175,070 ____________ _____________ 175,070 ____________ US$2,936,902 ___________ _____________ 2,936,902 Total revenues 27,227,816 175,070 8,695,542 154,379,675 190,478,103 27,227,816 2,936,902 10,388,743 206,313,881 246,867,342 EXPENSES:
International professional personnel costs 10,450,491 10,450,491 10,495,759 10,495,759 Local personnel costs 8,206,562 8,206,562 8,086,153 8,086,153
Training 1,268,972 1,268,972 931,091 931,091
Official travel 1,482,705 1,482,705 1,476,232 1,476,232 Documents and supplies 562,697 562,697 540,057 540,057 Acquisition and/or rental of assets and other 693,591 693,591 460,774 460,774 Maintenance, communications and general
services 1,555,371 1,555,371 1,704,176 1,704,176 Service contracts and transfers 1,862,042 1,862,042 1,664,040 1,664,040 Annual allowance to CATIE 7 1,000,000 1,000,000 1,000,000 1,000,000 Annual allowance to Caribbean Agricultural
Research and Development Institute (CARDI) 194,601 194,601 177,497 177,497 Miscellaneous 672,391 __________ ____________ _____________ 672,391 567,000 ___________ ___________ _____________ 567,000 Sub-total of expenses related to quota budget
and working subfund 27,949,423 27,949,423 27,102,779 27,102,779 Temporarily restricted funds assets released from
restrictions 1f 154,379,675 154,379,675 206,313,881 206,313,881 Disbursements financed with funds from the
Institutional Net Rate (INR) 5 _____________ __________ 10,639,741 _____________ 10,639,741 ____________ ___________ 11,372,623 _____________ 11,372,623
Total expenses 27,949,423 __________ 10,639,741 154,379,675 192,968,839 27,102,779 ___________ 11,372,623 206,313,881 244,789,283 Increase (decrease) in unrestricted net assets for the
year, before excluding net expenses capitalized as property, furniture and equipment and including
depreciation of the year (721,607) 175,070 (1,944,199) (2,490,736) 125,037 2,936,902 (983,880) 2,078,059 Exclusion of net capitalized expenses as property,
furniture and equipment 637,942 637,942 982,353 982,353 Prior period adjustments _____________ __________ 780,048 _____________ 780,048 ____________ ___________ ___________ _____________ _____________ Increase in unrestricted net assets for the year,
before including depreciation of the year (83,665) 175,070 (1,164,151) (1,072,746) 1,107,390 2,936,902 (983,880) 3,060,412 Inclusion of depreciation of the year (1,100,540) __________ ____________ _____________ (1,100,540) (1,100,313) ___________ ___________ _____________ (1,100,313) Increase (decrease) in unrestricted net assets US$ (1,184,205) US$175,070 US$ (1,164,151) US$ 1 US$ (2,173,286) US$ 7,077 US$2,936,902 US$ (983,880) US$ 1 US$ 1,960,099
INTER-AMERICAN INSTITUTE FOR COOPERATION ON AGRICULTURE (IICA)
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31, 2009 AND 2008
(Stated in United States Dollars)
Net Assets Unrestricted Temporarily Restricted Permanently Restricted Total
Regular Fund Miscellaneous
Income Fund Institutional Net Rate Fund Fixed Assets
Fund Trust Funds Land
General Subfund
Working Subfund
BALANCE AT DECEMBER 31, 2007 US$4,863,607 US$4,075,136 US$ 7,836,178 US$ 4,301,335 US$ 3,261,458 US$ 76,211,144 US$8,713,171 US$ 109,262,029
Restricted contributions received from donors 196,952,657 196,952,657
Net assets released from restrictions (206,313,881) (206,313,881)
Increase (decrease) in unrestricted net assets
for the year 1,107,390 2,936,902 (983,880) (1,100,313) 1,960,099
Prior period adjustments 50,077 50,077
Capitalization of net disbursements as property,
furniture and equipment (982,353) 982,353
Transfer from the General Subfund to the
Working Subfund (9,036) 9,036
Net decrease in disbursements made on behalf of contracts, agreements, and grants receivable
from donors ___________ ___________ ____________ ___________ ___________ (123,602) ___________ (123,602)
BALANCE AT DECEMBER 31, 2008 4,979,608 4,084,172 10,773,080 3,367,532 3,143,498 66,726,318 8,713,171 101,787,379
Restricted contributions received from donors 167,223,795 167,223,795
Net assets released from restrictions (154,379,675) (154,379,675)
Increase (decrease) in unrestricted net assets
for the year (83,665) 175,070 (1,944,199) (1,100,540) (2,953,334)
Prior period adjustments 780,048 780,048
Capitalization of net disbursements as property,
furniture and equipment (637,942) 637,942
Net decrease in disbursements made on behalf of contracts, agreements, and grants receivable
from donors ___________ ___________ ____________ ___________ ___________ 987,275 ___________ 987,275
BALANCE AT DECEMBER 31, 2009 US$4,258,001 US$4,084,172 US$10,948,150 US$ 2,203,381 US$ 2,680,900 US$ 80,557,713 US$8,713,171 US$ 113,445,488
INTER-AMERICAN INSTITUTE FOR COOPERATION
ON AGRICULTURE (IICA)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2009 AND 2008
(Stated in United States Dollars)
2009 2008
OPERATING ACTIVITIES:
Increase (decrease) in unrestricted net assets US$ (2,953,334) US$ 1,960,099 Plus: Items not requiring cash:
Prior period adjustments 780,048 50,077
Depreciation 1,100,540 1,100,313
Allowance for uncollectible accounts (18,233) Cash provided by (used in) changes in:
Quotas receivable from Member States (49,793) 3,589,901
Other receivables 99,989 1,321,551
Inventories (14,463) (12,385)
Prepaid expenses 414,846 42,035
Other assets (303) 15,437
Accounts payable and accrued expenses (2,033,000) 2,033,448
Purchase commitments (273,112) (298,702)
Other accruals (12,099) 16,774
Provisions 1,678,084 240,232
Net cash (used in) provided by operating
activities (1,280,830) 10,058,780
INVESTING ACTIVITIES:
Additions to furniture and equipment (747,959) (1,377,022)
Disposal of furniture and equipment 110,017 394,669 Net cash used in investing activities (637,942) (982,353)
FINANCING ACTIVITIES:
Restricted contributions received from donors 167,223,795 196,952,657 Disbursements made in the execution of trust funds (154,379,675) (206,313,881) Net cash provided by (used in) financing
activities 12,844,120 (9,361,224) NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 10,925,348 (284,797)
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR 104,533,460 104,818,257
CASH AND CASH EQUIVALENTS, END OF YEAR US$ 115,458,808 US$ 104,533,460 See accompanying notes to the financial statements.
INTER-AMERICAN INSTITUTE FOR COOPERATION
ON AGRICULTURE (IICA)
NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2009 AND 2008
(Stated in United States Dollars)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation - The Inter-American Institute for Cooperation on Agriculture
(IICA), formerly the Interamerican Institute of Agricultural Sciences, was established on October 7, 1942 pursuant to an initiative of the Organization of American States (OAS) in the District of Columbia, United States of America for an indefinite term. IICA is an autonomous international legal entity of Inter-American scope, whose main objective is to stimulate, promote, and support the efforts of the Member States to achieve agricultural development and rural well-being. Its regulations and operating procedures currently in use were approved at the First Ordinary Meeting of the Inter-American Board of Agriculture, held in August 1981 in Argentina.
IICA has the following formal authority structures:
i. Inter-American Board of Agriculture (IABA) comprised by a representative from each Member State.
ii. Executive Committee comprised by twelve Member States. iii. General Directorate.
At present, IICA is made up of 34 Member States with central headquarters located in San José, Costa Rica.
b. Accounting Policies and Funds Managed - The financial statements were prepared
in conformity with the accounting policies adopted by the IABA, and are presented according to the American Institute of Certified Public Accountants (AICPA)’s fund accounting policies for not-for-profit organizations. Funds managed by IICA are classified in the accompanying financial statements, according to the accounting policies established by IICA, as Unrestricted Funds, Temporarily Restricted Funds, and Permanently Restricted Funds. Additionally, such funds are classified according to their source and purpose, as follows:
UNRESTRICTED FUNDS
Regular Fund - This fund is comprised of two subfunds:
General Subfund - Activities of this subfund are mainly financed by mandatory contributions from Member States, as established by IABA, based on the quota computation system of the Organization of American States (OAS). In addition, the miscellaneous income is recorded in this
fund, unless the IABA or the Executive Committee has approved it for specific purposes. The purpose of the General Subfund is to finance execution of the regular activities planned and budgeted by IICA, including administration and management.
Working Subfund - The purpose of this subfund is to ensure the normal financial operation of IICA. According to Article No.89 of the Rules of the General Directorate, the subfund balance shall not exceed 15% of annual quotas approved for the corresponding fiscal year, unless otherwise decided by IABA or the Executive Committee. This fund is constituted by the proceeds from the balances of uncommitted appropriations financed by quotas outstanding at each fiscal year-end and by additional funds specifically assigned by IABA or the Executive Committee.
Fixed Assets Fund - The Fixed Assets Fund is used by IICA to control
unrestricted property, furniture and equipment, which have been either acquired with resources from the Regular Fund and the Institutional Net Rate (INR) Fund or donated thereto by a national or international organization. The balance of the Fixed Assets Fund represents the carrying value, net of depreciation, of fixed assets owned by IICA, except for land with permanent use restrictions.
Institutional Net Rate (INR) Fund - The objective of this Fund is to finance
additional costs incurred by IICA, in the execution of contracts, agreements, and grants subscribed by donors (Member States, international organizations, and others) for specific purposes and to contribute to the Institute’s pre-investment activities. The Institutional Net Rate Fund balance is comprised of the recovery of Institutional Net Rate (INR) in the management of projects executed by IICA with external resources.
Miscellaneous Income Fund - This fund was created by the IABA through
resolution IICA/IABA/Res.400 (XII-O/03) dated November 13, 2003, with the purpose of covering immediate financial needs of IICA. The Miscellaneous Income Fund is comprised of the balance of those proceeds from the General Subfund that are not committed in the Regular Fund budget at the end of the fiscal year in which they were received.
TEMPORARILY RESTRICTED FUNDS
Trust Funds - The Trust Funds have been established according to contracts,
agreements, and grants subscribed by donors (Member States, international organizations, and others) for specific purposes. For control purposes, separate records are maintained to account for income and expenses related to those funds. Moreover, financial resources pertaining to some funds are managed through separate bank accounts according to the agreement terms executed by IICA and the donors.
PERMANENTLY RESTRICTED FUND -LAND
This fund is represented by the original contribution of land to IICA, which has permanent use restrictions (Note 4).
c. Budget - A summary of significant aspects of each fund budget is provided below:
Regular Fund - On July 27, 2007, through Resolution IICA/IABA/ Res.433
(XIV-O/07), IABA approved the 2009 and 2008 budget for the Regular Fund made up of Member State quotas and other miscellaneous income amounting in 2009 to US$27,227,816 and US$4,100,000, respectively and amounting in 2008 to US$27,227,816 and US$4,100,000, respectively.
The 2009 and 2008 miscellaneous income corresponds to US$3,600,000 of budgeted income for that year and transfers of US$500,000 from the available balance of the Miscellaneous Income Fund.
The above resolution authorizes the Director General to transfer amounts between budget chapters not exceeding 10% of each chapter total.
In the Exhibit 2, a comparative analysis is shown of the detailed budget, actual expenses and respective over/under execution.
Special Budget - Through resolution IICA/IABA/Res.434 (XIV-O/07) dated
July 27, 2007, IABA approved a special budget allocation of US$1,000,000 for the period 2009-2008, financed through the funds received by the General Subfund from overdue quotas collected by IICA.
Trust Funds - Through resolution IICA/IABA/Res.254 (VIII-O/95) dated
September 19, 1995, IABA authorized the Director General to use the resources provided to IICA through the institutions and Member States related to contracts, agreements, and grants, for the purpose agreed upon. The mentioned resolution authorized the Director General to accept contributions and donations, and to subscribe contracts or agreements, as long as they are consistent with the objectives of IICA programs and that the Executive Committee of IICA is notified in advance of contracts or agreements exceeding US$500,000.
d. Monetary Unit and Foreign Exchange Transactions - The accounting records of
IICA are kept in United States Dollars (US$) and the financial statements are expressed in such currency. Assets and liabilities in currencies of the countries where IICA’s activities are developed are translated into U.S. Dollars primarily at official exchange rates in effect in each country. Transactions in such currencies are translated into U.S. Dollars using monthly average exchange rates. When determining its financial position and results of activities, IICA values and adjusts the balances of assets and liabilities that are recoverable or payable in the local currency of countries where activities are developed. The resulting differences are applied to the results of the period in which they are incurred.
e. Cash and Cash Equivalents - Cash and cash equivalents comprise cash on hand,
demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
f. Due from Regular Fund and Temporarily Restricted Net Assets - Funds contributed
by institutions and Member States (donors) to establish Trust Funds for executing contracts, agreements, and grants are recorded as restricted contributions received from donors within temporarily restricted net assets. As the funds are used in the agreed-upon activities, IICA recognizes simultaneously an income for funds released from restrictions and an expense of Trust Funds in the Statement of Activities of Unrestricted Net Assets. Generally, funds received from donors to execute contracts, agreements, and grants are managed by IICA as part of current assets of the Regular Fund. To identify the portion of funds corresponding to resources received from donors, an asset account entitled “Due from Regular Fund to Trust Funds” is included.
Whenever expenses incurred by IICA in the execution of a particular contract, agreement, or grant exceed the amounts contributed to date or are reimbursable, the resulting difference is recorded as an account receivable from the respective donor.
g. Inventories - Inventories are composed primarily of office supplies stated at average
cost, which does not exceed market value.
h. Allowance for Doubtful Accounts - According to IICA/IABA/Res.109 (III-E/86)
dated October 28, 1986, IICA adopted the policy of recording an allowance for doubtful accounts.
i. Property, Furniture, and Equipment - IICA has adopted the policy of charging the
amounts disbursed and/or committed for the acquisition of fixed assets to current period expenses, and, subsequently, capitalizing those amounts in the Fixed Assets Fund. Such capitalization is recorded at original acquisition cost of the asset or the market value in effect at the donation date, if they are donated. Minor repairs and maintenance expenses are charged to results of the annual activities. Such practice enables IICA to compare expenditures with annual budgeted amounts for the acquisition of fixed assets and, at the same time, to present such amounts as capitalized assets in the statement of financial position.
j. Accumulated Depreciation - The historical cost of fixed assets is depreciated over
the estimated useful lives using the straight-line method.
k. Provisions - According to the organization’s regulations, in case of resignation or
dismissal, IICA pays expenses for transfer, repatriation and recognition of years of service of international professional personnel. Such expenses are computed based on years of service of each official and the number of his/her dependents. Likewise, the national personnel may be entitled to recognition of years of service once they leave IICA, except in those countries where local laws require either payment of
fourteen or more salaries per year, or payment of severance equal to half or more of monthly salaries per year of service, in the event of voluntary or involuntary departure.
Where IICA offices are located, local personnel may be entitled to termination benefits according with applicable legislation in each country. IICA follows the policy of recording an accrual for severance indemnities to cover future disbursements for this concept. Additionally, a provision for termination benefits under various contractual agreements is recorded based upon the different national labor legislations. Actual termination payments are charged to the provision.
l. Purchase Commitments - In conformity with the Rules of the General Directorate
and its Financial Regulations, IICA follows the practice of recognizing a liability in its financial statements for those commitments assumed to acquire goods and services not yet received at year-end.
m. Net Assets - Restricted and Unrestricted Funds - Since 1995, IICA adopted the
accounting standards contained in the Statement of Financial Accounting Standards (SFAS) Nos.116 and 117. In accordance with those standards, IICA records contributions received from donors for specific purposes, as well as any income generated by such contributions, as Net Assets-Temporarily Restricted Funds. The balance of each Temporarily Restricted Fund decreases when available resources are used for established purposes, and is disclosed as “net assets released from restrictions” in the Statement of Changes in Net Assets and in the Statement of Activities of Unrestricted Net Assets.
The balance of Unrestricted Funds increases with the excess of income over expenses from IICA’s activities (increase in unrestricted net assets), as determined at year-end. Likewise, such balance decreases when there is an excess of expenses over income (decrease in unrestricted net assets).
n. Income from Member State Quotas - According to IABA resolutions, IICA follows
the policy of recording assessed quotas as receivable from Member States on the first day of the corresponding fiscal year. According to Article 86 of IICA’s Rules of the General Directorate, such quotas are collectible effective from that date.
o. Recovery of Institutional Net Rate (INR) - As established in certain contract
agreements signed with donors (Member States, international organizations, etc.), IICA recovers indirect costs incurred in the execution of trust funds, as a recognition of the administrative efforts devoted by IICA to manage such contracts. Such reimbursement is recognized by IICA as income when earned and increases the balance of the Institutional Net Rate (INR) Fund.
2. RESTRICTED CASH
Cash in banks at December 31, 2009 and 2008 includes funds held in separate bank accounts of US$35,968,879 and US$34,436,731, respectively, which may only be used to cover expenditures related to contracts signed by IICA and the respective donors.
3. CASH EQUIVALENTS
Cash equivalents are as follows:
2009 2008
In Argentinean pesos:
Time deposits, interest of 16% per annum US$ 105,707
In Mexican pesos:
Money market funds, interest of 3.32% per annum
(2008: 1.55% per annum) US$ 4,317,606 3,568,307
In Brazilian reais:
Money market funds, interest between 9.65% and 10.24% per annum (2008: 12.1% and 14.4%
per annum) 26,734,447 17,267,600
In Peruvian soles:
Time deposits, interest between 1.15% and 1.19%
per annum 2,023,521
In Chilean pesos:
Money market funds, interest between 0.03% and 1% per annum (2008: 0.53% and 0.72%
per annum) 56,653 151,610
In U.S. dollars:
Overnight deposits, interest of 0.05% per annum
(2008: 0.09% per annum) 21,602,845 3,741,442
Time deposits and mutual funds, interest between 0.55% and 4% per annum (2008: 0.45% and
3.82% per annum) 22,343,802 38,285,695
Total US$77,078,874 US$63,120,361
As of December 31, 2009 and 2008, cash equivalents of US$50,790,594 and US$24,344,141, respectively, are restricted to cover expenditures of contracts signed by IICA and the respective donors.
As of December 31, 2009, approximately 57% of the cash equivalents were placed with Bank of America, one of the largest banks of the United States of America. The remaining 43% was primarily placed with leading banks in Brazil, Mexico, Perú and Chile.
4. PROPERTY, FURNITURE AND EQUIPMENT - NET
The property, furniture and equipment, including their useful lives, are detailed as follows:
2009 2008
Unrestricted:
Buildings (25 years) US$ 5,205,177 US$ 5,205,177
Vehicles (4 years) 2,363,400 2,557,334
Furniture and equipment (3, 4, 5 and 10 years) 5,404,992 5,622,737 Total unrestricted fixed assets 12,973,569 13,385,248 Less: Accumulated depreciation (10,292,669) (10,241,750) Total unrestricted fixed assets - net 2,680,900 3,143,498 Permanently restricted - land 8,713,171 8,713,171
Total US$ 11,394,071 US$11,856,669
Property, furniture and equipment do not include fixed assets acquired with resources from special funds (Trust Funds), since such disbursements are considered expenditures related to the execution of specific agreements related to those funds. However, in accordance with the provisions of each agreement, when assets are donated, exchanged, or sold to IICA, they are recognized in the accounting records as part of the Fixed Assets Fund. Land located in Costa Rica (San Isidro de Coronado, Turrialba and Limón) was donated to IICA by the Government of Costa Rica. However, once IICA concludes its official mission or terminates its functions in Costa Rica, this property and any improvements thereto shall be returned to the Government of Costa Rica. Income capitalized for this donation is shown in the financial statements of IICA as part of Net Assets - Permanently Restricted Funds. Throughout the years, IICA has built several administrative facilities and related infrastructure on the properties donated by the Government of Costa Rica. These improvements to donated properties have no restrictions of use and are being amortized over their estimated useful lives. As of December 31, 2009, the net book value of such assets is US$455,402 (2008: US$639,078).
According to an agreement subscribed between the Government of Costa Rica and IICA, the Tropical Agricultural Research and Training Center (CATIE) was granted usufruct rights to land and buildings located in Turrialba and Limón, Costa Rica.
5. INCOME AND EXPENSES RELATED TO INSTITUTIONAL NET RATE (INR)
On October 13, 1997, through Resolution IICA/IABA/Res.310 (IX-O/97), the Inter-American Board of Agriculture agreed to establish the Institutional Net Rate (INR) Fund. The purpose of this fund is to finance the additional costs incurred by the Institute in the execution of contracts and to contribute to the institutional pre-investment activities.
Income and expenses related to Institutional Net Rate (INR) are comprised as follows:
2009 2008
Income:
Ministry of Agriculture, Livestock, and Food -
(MAGA) - Guatemala US$ 1,447,541
Ministry of Agriculture and Rural Development -
Colombia US$ 3,023,429 3,267,327
Ministry of Agriculture and Livestock Ecuador 223,483 20,165 Secretariat of Agriculture, Livestock, Fisheries
and Food - Argentina 448,283 342,463
Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA) -
Mexico 1,656,078 1,764,287
Ministry of Agriculture - Peru 188,123 320,435
Government of the United States of America 263,119 425,466 Ministry of Agriculture, Livestock and
Procurement - Brazil 64,874 206,705
Secretariat of Hydro - Infrastructure of the
Ministry of National Integration - Brazil 511,935 511,372 Ministry of Agrarian Development - Brazil 616,985 793,882 Secretariat of Agriculture and Livestock-Honduras 520,437 645,286 Brazilian Institute of Environment and Renewable
Natural Resources 163,820
Inter-American Development Bank 254,548 53,940
Central American Integration System of
Agricultural Technology 142,469 79,033
Other institutions 617,959 510,841
Total US$ 8,695,542 US$10,388,743
Expenses:
International professional personnel costs US$ 869,778 US$ 1,200,730
Local personnel costs 5,087,038 4,751,819
Training 421,074 653,010
Official travel 437,914 415,222
Documents and supplies 345,683 227,198
Acquisition and / or rental of assets and other 148,875 567,050 Maintenance, communications and general services 1,553,436 1,226,631
Service contracts and transfers 1,671,952 2,209,613
Other costs 103,991 121,350
6. COMMERCIAL AND MISCELLANEOUS OPERATIONS
A breakdown of revenues and expenses from commercial and miscellaneous operations is as follows:
2009 2008
Revenues:
Interest earned from cash equivalents US$3,278,133 US$5,322,058
Proceeds from equipment sales 122,437 158,105
Purchase discounts 296,887 1,147,796
Book sales commission 1,216 1,987
Sales of services 130,303 81,553
Other 244,768 511,048
Miscellaneous 13,245 35,504
Total revenues from commercial and
miscellaneous income 4,086,989 7,258,051 Expenses:
Local personnel costs 1,067,337 951,274
Training 163,468 202,425
Official travel 402,042 436,908
Documents and supplies 395,117 316,459
Acquisition and / or rental of assets and other 273,049 374,714 Maintenance, communications and general services 968,569 976,537
Service contracts and transfers 582,327 690,369
Other costs 135,013 143,903
Sub-total 3,986,922 4,092,589
Exchange losses - net (75,003) 228,560 Total expenses from commercial and
miscellaneous activities 3,911,919 4,321,149
Excess of income over expenses US$ 175,070 US$2,936,902
7. TROPICAL AGRICULTURE RESEARCH AND TRAINING CENTER (CATIE)
On September 12, 2000, under Law No.6873 the Costa Rican Legislative Assembly ratified CATIE’s creation contract entered into by the Government of Costa Rica, IICA and CATIE. The most significant terms of this Law are as follows:
a. The Inter-American Board of Agriculture will be the superior governing body of CATIE.
b. CATIE’s members (partners) may be regular or special. The regular members will be IICA, the Government of Costa Rica, and the Governments of the remaining member countries of IICA, which incorporate into CATIE via acceptance of the Contract.
Special members will include international governmental and non-governmental organizations, international centers, and private organizations with similar purposes as those of CATIE.
c. IICA will contribute up to a maximum of 5% of IICA’s quotas budget to CATIE’s basic budget. The use of those contributions may be subject to an audit by IICA, when considered necessary. Each member country of CATIE will annually contribute US$50,000 to cover CATIE’s expenses.
d. The new agreement will be for a 20-year period, effective from its enacting date, and may be renewed for equal consecutive terms.
e. CATIE is entitled to the following: i) usufruct rights to land, buildings, equipment, and other property contributed by IICA, plus improvements thereto, during the entire term of the contract, and ii) all assets CATIE has acquired or will acquire in the future.
f. Upon termination of the contract, all usufruct property as well as improvements thereto, will be returned to IICA. The remaining assets will be distributed between IICA, the Government of Costa Rica, and regular active members based on quotas paid.
During the years ended December 31, 2009 and 2008, IICA contributed to CATIE US$1,000,000 per annum in accordance with the approved allocation in the Program Budget.
8. DISBURSEMENTS SUBJECT TO APPROVAL
Some grant agreements subscribed with international organizations, establish that disbursements for agreed-upon programs executed with grant funds are subject to approval or rejection by those same organizations, depending on compliance with the agreement terms.
As of December 31, 2009, management of IICA is not aware of any expenses not yet reimbursed, that would have been questioned or disallowed by the respective donors.
9. TAXES
As an international organization, IICA is exempt from income and sales taxes in Costa Rica and other countries where it operates. With respect to other taxes, such as contributions and present or future national and municipal taxes, customs duties, national licenses, among others, the exemption is dependent upon the agreements subscribed with the Governments of those countries.
10. INACTIVE FUNDS
The Inter-American Board of Agriculture (IABA) approved, through various resolutions, the establishment of the following funds. Nevertheless, as of December 31, 2009 these funds have not received yet any contributions and therefore, remain inactive.
a. Patrimonial Fund - The purpose of this fund is to establish an endowment for the
partial financing of IICA’s activities. The fund balance would be made up of donations and other voluntary contributions from governments, individuals, private institutions, and other donors, as well as a portion of the Fund’s annual income deposited in the endowment to increase and preserve its real value.
Capital Assets donated to the Fund, including all reinvested income to increase and maintain the real value of the Fund’s Capital Assets, shall not be expensed for a 20 year-period from the date of the IABA resolution creating the Fund.
b. IICA Associates Trust Fund - In Resolution IICA/IABA/Res.312 (IX-O/97), dated
October 13, 1997, the Inter-American Board of Agriculture approved the creation of the IICA Associates Trust Fund. The status of IICA Associate is granted to certain permanent observers, international, regional, and national organizations, and other non-IICA Member States. The Fund’s balance is to be made up of contributions from such Associates, Member States and other donors to this Fund, and will be governed by the corresponding rules and regulations of the Institute and its Statutes approved by the Executive Committee.
11. CONTINGENCIES
As of December 31, 2009, IICA is a party in various lawsuits filed through its Offices. These lawsuits deal basically with labor and/or commercial complaints related primarily to projects and are in different procedural stages. The amounts being sought by the claimants total approximately US$688,000.
The legal advisors of IICA believe that no material liability will result from these legal proceedings. Nevertheless, the financial statements of IICA for the year ended December 31, 2009, include a provision of US$201,960 to cover potential losses from the mentioned litigations.
In 2009, the Colombian Government ordered the suspension of all disbursements for and the signing of new contracts related to an agricultural subsidy program known as Agro Ingreso Seguro (AIS), administered by IICA on behalf of the Ministry of Agriculture and Rural Development (MADR). This decision was the immediate result of public allegations to the effect that approximately 6% of the subsidies (out of US$150 million in subsidies) had been allocated to certain high-income beneficiaries.
IICA’s responsibilities under this program are limited to requesting project proposals from interested applicants, through an advertising campaign; evaluating the technical merits of the proposals received, for subsequent approval by MADR officials and IICA’s Representative; as well as overseeing the payment of subsidies in accordance with the contracts signed between IICA and the applicants. Nothing in the underlying Colombia legislation or subsequent MADR regulations and guidelines excludes any person or entity from presenting qualified projects and receiving the corresponding subsidies, based on the level of income.
As a result of public and media pressure, the Colombia Government could make claims arising from the administration of the AIS program. The most significant threat to date is the initiation of an administrative process within the MADR to declare IICA “in noncompliance”. Should IICA be declared “in noncompliance”, the MADR may execute against a performance bond of up to US$20 million issued by a Colombian insurance company. If the conflict cannot be resolved amicably, would have to be settled via arbitration in compliance with the arbitration clause of the agreement. Even though, according to our lawyers, the claims of the government are not founded on facts and should not be upheld in law, the court costs for the parties should it go to arbitration could be several million dollars.
In addition, IICA may face other potential claims from the beneficiaries of the program whose projects were suspended. However, in recent conversations with those beneficiaries most affected, it appears unlikely that they will present any claims against IICA since, from their point of view, the Institute is one more victim of the regrettable developments that have led to this situation.
Lastly, contractors hired by IICA, who may be laid off from the program due to the suspension of the projects ordered by the Government, may present labor-related claims. The amounts of such claims cannot be predicted currently by the Administration.
INTER-AMERICAN INSTITUTE FOR COOPERATION ON AGRICULTURE (IICA)
SUPPLEMENTARY FINANCIAL INFORMATION
INDEX
EXHIBIT
1. Statement of Movements of Member States Quotas Receivable 2. Program Budget and Expenses by Chapter
EXHIBIT No.1
Page 1 of 1
INTER-AMERICAN INSTITUTE FOR COOPERATION ON AGRICULTURE (IICA) REGULAR FUND
STATEMENT OF MOVEMENTS OF MEMBER STATES QUOTAS RECEIVABLE YEAR ENDED DECEMBER 31, 2009
(Stated in United States Dollars)
Country Uncollected Quotas at Beginning of Year Quotas for the Year
Quotas Collected During the Year Uncollected Quotas at Year-End
Prior Years Current Year Total Prior Years Current Year Total
Antigua & Barbuda US$ (498) US$ 6,602 US$ (498) US$ 6,602 US$ 6,104
Argentina 1,177,922 US$ 1,177,922 US$ 1,177,922
Bahamas 23,107 44,289 44,289 (21,182) (21,182) (1) Barbados 22,007 22,007 22,007 Belize 7,152 7,152 7,152 Bolivia 19,256 16,505 US$ 19,256 19,256 16,505 16,505 Brazil 1,923,086 2,097,812 1,923,086 1,002,900 2,925,986 1,094,912 1,094,912 Canada 3,785,469 3,785,469 3,785,469 Colombia 221,995 221,995 221,995 Costa Rica 55,569 41,263 55,569 28,392 83,961 12,871 12,871 Chile 157,350 305,897 152,949 152,949 4,401 305,897 310,298 Dominica 4,676 10,728 10,728 (6,052) (6,052) (1) Dominican Republic 47,803 45,389 2,414 2,414 45,389 45,389 90,778 Ecuador 45,389 45,389 45,389 El Salvador 23,107 23,107 23,107 Grenada 6,052 6,052 6,052 Guatemala 6,167 41,263 6,167 41,263 47,430 Guyana 196 6,052 196 5,680 5,876 372 372 Haiti 19,256 16,505 19,256 16,505 35,761 Honduras 16,505 16,505 16,505 Jamaica 44,839 44,839 44,839 Mexico 1,791,640 1,791,640 1,791,640 Nicaragua 44,172 16,505 44,172 16,505 60,677 Panama (183) 35,761 35,578 35,578 (183) 183 Paraguay (1,702) 45,389 44,918 44,918 (1,702) 471 (1,231) (1) Peru 121,863 121,863 121,863
Saint Kitts & Nevis 6,052 6,052 6,052
Saint Lucia 6,602 6,602 6,602
Saint Vincent & the Grenadines 6,052 6,052 6,052 6,052 12,104
Suriname 16,505 16,505 16,505
Trinidad & Tobago 49,516 49,516 49,516
United States of America 16,359,412 16,359,412 16,359,412
Uruguay 61,344 61,344 61,344
Venezuela 755,663 755,663 755,663
EXHIBIT No.2
Page 1 of 1
INTER-AMERICAN INSTITUTE FOR COOPERATION ON AGRICULTURE (IICA) REGULAR FUND
PROGRAM BUDGET AND EXPENSES BY CHAPTER YEAR ENDED DECEMBER 31, 2009
(Stated in United States Dollars)
Budget Expenses
(Over) Under Execution Absolute Percentage CHAPTER 1: DIRECT TECHNICAL
COOPERATION SERVICES:
Trade and the competitiveness of agribusiness US$ 7,014,687 US$ 6,922,210 US$ 92,477 98.68
Technology and innovation 6,036,778 5,972,985 63,793 98.94
Agricultural health and food safety 6,030,245 5,970,041 60,204 99.00
Development of rural communities 4,397,462 4,352,265 45,197 98.97
Sustainable management of natural resources
and the environment 1,998,855 2,073,622 (74,767) 103.74
Repositioning of agriculture and rural life
and renewal of their institutional framework 2,460,380 2,567,621 (107,241) 104.36 Total Chapter 1 27,938,407 27,858,744 79,663 99.71
CHAPTER 2: MANAGEMENT COSTS:
Office of the Director General 649,041 639,759 9,282 98.57
Directorate of Administration and Finance 726,260 668,148 58,112 92.00 Total Chapter 2 1,375,301 1,307,907 67,394 95.10
CHAPTER 3: GENERAL COSTS AND PROVISIONS:
Governing Bodies 400,000 244,697 155,303 61.17
Insurance 320,000 385,454 (65,454) 120.45
Pensions 262,650 237,003 25,647 90.24
OAS Administrative Tribunal 25,000 24,050 950 96.20
External audit 95,500 95,500 100.00
Programme of Assistance in Emergencies ____________ 9,367 (9,367) 100.00 Total Chapter 3 1,103,150 996,071 107,079 90.29
CHAPTER 4: RENEWAL OF
INFRASTRUCTURE AND EQUIPMENT:
Renewal of infrastructure and equipment 910,958 901,440 9,518 98.96
Total Chapter 4 910,958 901,440 9,518 98.96
EXHIBIT No.3
Page 1 of 2
INTER-AMERICAN INSTITUTE FOR COOPERATION
ON AGRICULTURE (IICA)
EXECUTION OF EXTERNAL RESOURCES BY FINANCING SOURCE YEAR ENDED DECEMBER 31, 2009
(Stated in United States Dollars)
Source Amount a. Member States Argentina US$ 7,946,655 Bolivia 91,405 Brazil 19,880,502 Canada 1,505,662 Colombia 66,889,843 Costa Rica 731,284 Chile 327,769 Dominican Republic 182,288 Ecuador 5,212,699 El Salvador 1,873,997 Guatemala 186,607 Haiti 13,462 Honduras 12,602,431 Jamaica 20,000 Mexico 23,565,346 Nicaragua 73,099 Panama 25,868 Paraguay 720,905 Peru 4,056,520 Saint Lucia 25,867
United States of America 1,312,617
Uruguay 1,118,938
Venezuela 165,945
Sub-total - Member States 148,529,709
b. Other Institutions and Governments
Andean Development Corporation 22,053
Biotechnology Industry Organization 9,320
Consultative Group on International Agricultural Research 54,980
CropLife International 24,699
European Union 795,540
Food and Agriculture Organization of the United Nations 38,739
Global Crop Diversity Trust 44,832
EXHIBIT No.3
Page 2 of 2
INTER-AMERICAN INSTITUTE FOR COOPERATION
ON AGRICULTURE (IICA)
EXECUTION OF EXTERNAL RESOURCES BY FINANCING SOURCE YEAR ENDED DECEMBER 31, 2009
(Stated in United States Dollars)
Source Amount
Global Forum On Agricultural Research US$ 121,018
Inter-American Development Bank 153,572
International Center for Forestry Research 2,683
International Coffee Organization 172,684
International Federation of Organic Agriculture Movements 26,795
Market Information Organization of the Americas 147,494
Organization of American States 14,393
Oxfam International 17,456
Pan American Environmental Foundation 22,790
Southern Common Market 209,600
Spanish Agency for International Cooperation 712,551
Swiss Agency for Development and Cooperation 1,470,079
Technical Center for Agriculture and Rural Cooperation - Holland 119,782
The Travel Foundation Tobago 17,060
United Nations Development Programme 14,933
World Bank 1,372,009
World Food Programme 34,898
World Trade Organization 208,894
Others 21,112
Sub-total - Other Institutions and Governments 5,849,966
Grand total US$154,379,675
(Concluded)
